Have you downloaded the Venmo app? Launched in 2009, Venmo quickly became one of the most popular money transfer apps on the market.
Venmo was originally designed as a peer-to-peer money transfer app, but now people use it for everything from splitting bills to paying for Uber rides, not to mention tipping their hair stylists, shopping with their phones, and sending loved ones a little extra money when they really need it.
How does Venmo work? Is Venmo secure? Are there any Venmo fees I should know about? Let’s take a closer look at how Venmo works, how to get started with Venmo, how to avoid Venmo scams, whether you should use Venmo or PayPal, and more.
What is Venmo?
Venmo is primarily a mobile app that makes it simple and cheap (or free) to send peer-to-peer money. While some functions can be done on desktop, you can only send and receive money through the mobile app. You can also send payments and payment requests through the app using iMessage. You can also personalize your messages with special emojis.
Venmo’s goal is to help consumers avoid splitting checks and other situations where they need to transfer cash back and forth. Common uses of Venmo include splitting a cab fare with a friend, paying a coworker back for happy hour drinks, or even sending a roommate half their rent. When going out to dinner with friends, one friend pays and the other friend Venmo’s their share to that person.
With Venmo, you no longer need to carry cash and you no longer have an excuse to avoid making payments.
How does Venmo make money?
Venmo makes money in a few ways. While it’s free to send money from a linked bank account, debit card, or Venmo account, the company charges fees for certain other services. For example, standard bank transfers, which are free, usually take one to three business days to arrive in your bank account. However, if you need the money quickly, Venmo charges a small instant transfer fee.
Additionally, Venmo charges fees for sending money by credit card, as well as for using Venmo’s check cashing feature, accepting payments for goods and services, adding cash at stores, buying and selling cryptocurrency, etc. If you have a Venmo card, the company also makes money every time the card is used.
How does Venmo work?
To send or receive money with Venmo, you’ll need to set up a Venmo account. You can get started using the Android or iOS app. Venmo doesn’t have a web browser option. You’ll need to use the mobile app to send, receive, and make purchases.
Now let’s look at some of the main uses for Venmo.
Send money to family and friends: Venmo is a peer-to-peer money transfer service, which means you can use the service to send digital payments to family and friends. For example, if you and a friend order takeout, one person can pay the full amount of the takeout order and everyone else can pay back through Venmo. You can also use Venmo to request money from other people. For example, if you lend your sibling money, you can send a payment request through Venmo. Roommates often use Venmo to split shared household bills.
Buy online: Venmo is owned and operated by PayPal, so it’s not surprising that many online merchants accept Venmo as a payment method. When you see the PayPal button at checkout, you also have the option to pay with Venmo. Some merchants also offer a “Pay with Venmo” button on their checkout page. There are no fees when you use Venmo to make online purchases, even if you use a credit card.
Sending and receiving money for goods and services: If you run a small business, you can use Venmo to get paid. Keep in mind that money sent to a personal account and tagged as “goods and services” is subject to a 2.99 percent merchant transaction fee. You can also use a Venmo business account to receive payments from Venmo.
You can add funds to your Venmo account using a debit card or checking account. You can send money using a credit card, debit card, prepaid debit card, or checking account, but not a savings account.
You need a bank account to withdraw cash, so if you want to receive funds via Venmo and cash them out, you’ll need to link your Venmo account to a bank account.
Are Venmo transactions public?
Venmo transactions can be public, but they don’t have to be. Venmo has three different privacy settings that you can choose as your default for purchases, or you can change your settings on a per-purchase/transaction basis.
Here are the privacy settings listed on the Venmo website:
- public: Transactions are shared on Venmo’s public feed and can be seen by anyone on the internet.
- Friends only: Transactions will only be shared with your Venmo friends and the Venmo friends of the other participants.
- Private: Venmo will not share transactions outside of your personal feed, or, if you are paying another user, outside of the feed of the person you paid.
How much does it cost to use Venmo?
Does it cost money to use Venmo? Are there any Venmo fees I should be aware of?
There are no fees when you use Venmo to make online purchases, even if you use a credit card, and you can also send money to friends for free if you send it from a linked bank account, your Venmo account balance, or a debit or prepaid card.
Select the instance where you pay to use Venmo
- instant Forwarding Service: There’s a fee of 1.75 percent (minimum $0.25 and maximum $25) to instantly transfer money from the app to your linked bank account or debit card. You can also transfer cash to your bank account for free, but it can take up to three business days to receive the funds.
- Credit card transfer: If you use your credit card to send money to someone else, there’s a flat 3 percent fee. Also, be aware that some credit card issuers consider such peer-to-peer transactions to be cash advances, so you may have to pay a cash advance fee and a cash advance interest rate when you send the money.
- Receive payments for goods and services: If you receive payment on your personal Venmo account for items tagged by the payer as “goods and services,” there’s a merchant fee of 2.99 percent.
- Sending to a digital wallet: You can send money to your Paypal digital wallet using Visa+ for free. If you use Visa+ to send money to other eligible digital wallets, there is a 1.75 percent fee (minimum $0.25 and maximum $25).
- Cache checking function: When you add funds to your account using Venmo’s cash check feature, there’s a 1 percent fee (with a $5 minimum) for payroll checks or government checks, and a 5 percent fee (with a $5 minimum) for other types of checks.
- Buy and sell cryptocurrencies: If you use your Venmo account to buy or sell cryptocurrency, you’ll be charged fees of up to 1.50 percent (minimum $0.49).
- Add cash in store: You can add cash to your Venmo account using your debit card at participating stores, but there’s a $3.74 fee for doing so.
How to get started with Venmo
If you want to know how to send money to your friends, first download the Venmo app. Then, enter your personal information such as your phone number, email address, bank account number, etc. You will also need to create a Venmo login and password to protect your account.
Keep in mind that when you first open an account, you’ll be limited to $299.99 per week on payments and purchases. Once you verify your account, your Venmo limits will increase as follows:
- Send up to $60,000 per week
- Up to $7,000 in total purchases in one week
Please note that limits apply per transaction, and additional limits also apply to Venmo Mastercard debit card transactions.
How long does it take for a Venmo payment to arrive?
To receive money from Venmo, you need to open a Venmo account. From there, you can accept payments from other people. You can also move money into your Venmo account using a linked bank account. To withdraw money from your Venmo account, you can set up a transfer to your bank account.
One of the main benefits of using Venmo is the speed at which you can send and receive money. Once your Venmo balance is set up, money you receive from others is usually accessible within a short period of time (hours to days). However, if the recipient is opening a Venmo account for the first time, it may take a few days to receive the money.
If you’re willing to pay a 1.75 percent fee (minimum $0.25, maximum $25), you can instantly transfer money from your Venmo account to your bank account. Standard bank transfers are free but take 1-3 business days to process.
Is it safe to use Venmo?
Is Venmo safe to use? Yes. Venmo uses encryption to keep your funds and account details safe. It also uses multi-factor authentication to verify your identity for an extra layer of security. In fact, when you set a unique PIN in the app, you can be sure that only you can send or receive money using your Venmo account. The Venmo app gives you access to additional security features, including the Touch ID login option.
That said, Venmo scams do exist. Knowing about common Venmo scams can help you avoid them. Many Venmo scams occur on Craigslist and Facebook Marketplace, where both buyers and sellers can be defrauded by untrustworthy Venmo users. To avoid getting scammed on Venmo, only send money to people and retailers you know and trust.
Do you need extra security when using Venmo?
It’s a good idea to sign up for Venmo’s extra security features. Setting up two-factor authentication, creating a unique PIN code, and using Touch ID can all help ensure that you’re the only one who has access to your Venmo account. We encourage you to take advantage of all the security features Venmo has to offer.
Venmo Mastercard® Debit Card*: What you need to know
Want more flexibility with your Venmo balance? Venmo offers a Mastercard debit card called the Venmo Mastercard debit card, which lets you spend your Venmo balance anywhere Mastercard is accepted. Venmo limits for the Venmo Mastercard debit card are:
- $2,999.99 per purchase
- Daily purchase limit is $3,000
- Total weekly purchase limit of $7,000.00
- The daily limit for ATM withdrawals, over-the-counter withdrawals and cashback from purchase transactions is $1,000.
- Daily transaction limit of 30
You may also be charged fees when withdrawing cash from an ATM, such as a $2.50 domestic ATM withdrawal fee from out-of-network ATMs. If you want to withdraw cash for free with your debit card, you can use the MoneyPass ATM network without paying this additional fee.
Venmo Credit Card
Venmo has also partnered with Synchrony Bank to offer the Venmo Credit Card*. The card is available to US customers and only requires a soft pull of credit to apply for the card, although a hard inquiry will be performed if approved.
This card offers a unique 3-2-1 cash back structure, earning 3 percent back on your highest spending category, 2 percent back on your second-highest spending category, and 1 percent back on all other purchases. Eligible categories include:
- Transport
- Food
- trip
- Entertainment
- Dining and Nightlife
- Bills and utility bills
- Health and Beauty
- gas
- other
Like the Apple Card*, the Venmo Credit Card offers strong mobile app integration: You can use the Venmo app to track your card activity, pay bills, and access your virtual card number.
Venmo vs PayPal: Which is better?
Venmo and PayPal are both great options for sending money on your mobile device, and since PayPal owns Venmo, it makes sense that they work similarly. Both platforms make it easy to send and receive money, but many people prefer Venmo for the social aspect of the app.
Both platforms are free to use if you use your account balance to send money, but both platforms charge a fee if you use your credit card to send money to friends and family.
As mentioned above, Venmo charges a 3 percent fee every time you send money to someone using your credit card, and PayPal charges a 2.9 percent fee plus a flat fee depending on the currency you use: if the payment is in USD, the flat fee is $0.30, whether you use a credit card, debit card, or PayPal Credit.
There’s another big difference between Venmo and PayPal: PayPal lets you send money to friends and family using a desktop computer. This is an important consideration if you don’t want to send money through the app, which is the only option Venmo allows. Consider reading Bankrate’s PayPal guide to learn more about how this popular payment system works (keep in mind that both Venmo and PayPal can be great peer-to-peer payment options).
Conclusion
Venmo is a popular app that lets you securely send money to family and friends. If you want the convenience of making purchases from your phone or quickly paying back friends for shared expenses, consider downloading the Venmo app today.
*Information about the Venmo Mastercard® debit card, Venmo credit card, and Apple Card was collected independently by Bankrate. Card details have not been verified or endorsed by the issuers.
